World Bank President Paul Wolfowitz, embroiled in a favouritsm scandal for arranging a hefty pay package for his girlfriend, announced on Thursday that he was stepping down by June-end in the 'best interests' of the bank, after resisting for weeks the demand for his ouster.

"I have concluded that it is in the best interest of
those whom this institution serves for that mission to be carried forward under new leadership," Wolfowitz said in a statement.

The World Bank Chief was in the eye of a storm for arranging a generous promotion and pay package for his girlfriend Shaha Riza.

Announcing Wolfowitz's resignation, the 24-member Bank Board said "he assured us that he acted ethically and in good faith in what he believed were the best interests of the institution and we accept that".

A Bank panel had found that Wolfowitz violated conflict-of-interest rules in his handling of the 2005 pay package of bank employee Riza.

World Bank chief ordered girlfriend's pay hike

Wolfowitz said he was pleased that the board "accepted my assurance that I acted ethically and in good faith in what
I believed were the best interests of the institution, including protecting the rights of a valued staff member."

From the very start Wolfowitz maintained that he went by the suggestions of the ethics committee in 2005 as he
sought to handle the affairs of his girlfriend.

The statement of the Board made no mention of any financial arrangements related to Wolfowitz's departure, nor
did it speak to Riza's future.

Riza worked for the bank before Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest but stayed on the bank's payroll. Her salary went from close to 67,000 pounds ($133,000) to 90,000 pounds ($180,000). With subsequent raises, it eventually rose to 96,000 pounds ($193,590). The panel concluded that the salary increase Riza received "at Wolfowitz's direction was in excess of the range" allowed under bank rules.

Wolfowitz's resignation ends a two-year run at the development bank that was marked by controversy due to his previous role as an architect of the Iraq war when he served as the No 2 official at the Pentagon.

Text: PTI